Amp Ltd

Well good morning everyone and let me start by paying my respects to the traditional custodians of the land on which we hold this meeting today which for me is the Gadigal people of the Eora Nation and pay my respects to all elders past and present from the lands on which you join us today. With me here today of course is Peter Fredrickson who joined AMP as the new CFO last month. We're delighted to have someone of Peter's calibre and experience on our executive team at a time of importance for AMP's transformation. Peter will talk through our financial performance shortly and I'll then provide an update on our progress against the strategy before we move to questions. Firstly, I'd like to give you an overview of the year and some key highlights. In November 2021, we presented our strategy, setting us on a path to a new AMP. The results we present today reflect the for AMP's transformation. Peter will talk through our financial performance shortly, and I'll then provide an update on our progress against the strategy before we move to questions. Firstly, I'd like to give you an overview of the year and some key highlights. In November 2021, we presented our strategy, setting us on a path to a new AMP. The results we present today reflect a full year of execution against that strategy and the excellent progress we have made delivering on our key strategic objectives. We've continued to experience uncertain economic conditions and it's clear that this will continue for some time. Investment market volatility, rising inflation and higher interest rates are impacting our customers and putting pressure on the cost of living. AMP is well positioned to navigate this environment and continue supporting our customers and delivering for shareholders with a robust balance sheet and capital position, strong credit quality in our bank's loan book and a clear strategy identifying the key areas for longer term growth. Two of the key parts of our strategy were and are to reposition and simplify the business. Much work has occurred but I think it's important to remind all of our stakeholders what the business will look like post the completion of the AMP capital sales. Our Australian businesses consist of AMP Bank, our digital first retail challenger bank and our three wealth management businesses. Platforms, which comprises our flagship Northrap platform. Advice, which provides professional services to advisors, both aligned and non-aligned. And Master Trust, our superannuation business. New Zealand operates as a relatively stand-alone business, offering wealth management, financial advice and distribution of general insurance products. The businesses reflect the A&P of today and tomorrow and continue our 170-year history of supporting our CUSRAT platform, Advice, which provides professional services to advisors, both aligned and non-aligned, and Master Trust, our superannuation business. New Zealand operates as a relatively standalone business, offering wealth management, financial advice and distribution of general insurance products. The businesses reflect the AMP of today and tomorrow and continue our 170-year history of supporting our customers with their financial well-being. This simplified and more streamlined portfolio sets up AMP for the future and allows us to focus on our growth opportunities in AMP bank and platforms. Of course, we cannot forget our strategic partnerships, including China Life on the investment management and pension side. but joint ventures are well positioned to benefit from the growth of the pension and retail investment industry in China. We also have our minority stake in the US-based real estate manager, PCCP. With our decision to sell the AMP capital businesses, we'll consider whether these growth opportunities in AMP bank and platforms. Of course, we cannot forget our strategic partnerships, including China Life on the investment management and pension side. The joint ventures are well positioned to benefit from the growth of the pension and retail investment industry in China. We also have our minority stake in the US-based real estate manager, PCCP. With our decision to sell the AMP capital businesses, we'll consider whether this stake is the right hold for AMP longer term. For now, it continues to perform in line with our expectations. Now let's talk about our earnings and executions for the year. I'd describe our FY22 underlying earnings of $184 million as solid in a market where there was significant uncertainty and downturn. These earnings were impacted by our strategic decision to replace Platforms and Master Trust in 21 to strengthen our competitive position. It also reflects lower fees earned on assets under management due to the decline in investment markets and a period of margin compression for AMP Bank amid strong competition. Bank margins have, however, started to recover in the second half as we previously indicated. We grew the mortgage book of the bank by $2 billion, continued to grow the flows from IFAs and delivered on our cost targets. We also finalised the transactions to sell the AMP capital businesses with only the domestic infrastructure and real estate sale to DEXAs pending. Our capital management remains strong and we remain committed to returning the $1.1 billion cap second half as we previously indicated. We grew the mortgage book of the bank by $2 billion, continued to grow the flows from IFAs and delivered on our cost targets. We also finalised the transactions to sell the AMP capital businesses with only the domestic infrastructure and real estate sale to DEXAs pending. Our capital management remains strong and we remain committed to returning the 1.1 billion capital to shareholders announced in August last year. To date we've been able to buy back $267 million of the $350 million initial tranche and have received regulatory approvals to return a further $400 million. This includes a dividend of two and a half cents which will be franked 20% which we announced today. This dividend demonstrates our confidence about the future trajectory of our company. We have a strong balance sheet and will continue to assess strategic opportunities to drive sustainable growth in our key areas. As you would expect, these options will always be considered against alternative options to drive shareholder value. The achievements of 22 are significant for AMP and demonstrate that we're able to execute on our promises and give us confidence in the future. Diving a little deeper into these deliverables, In the bank, despite highly competitive conditions, we've continued to grow organically and inorganically, seeing 16% customer growth and 1.8 times systems growth, or excluding NANO, 1.5 times. We also launched one of the true first end-to-end digital mortgages in the second half of the year as we expanded our direct-to-consumer offers. It is in the early stages, but demonstrates we can deliver quickly and utilise partnerships to our advantage. IFA flows in our flagship North platform trended upwards again, increasing 31% on 2021, and flows generally are improving. We launched a set of unique-to-market retirement income solutions at the end of last year, and we want to become known as the retirement specialists. Importantly, these new solutions encourage advisors to re-look at A&P as a platform provider for their broader business. In April 22, we secured the sales of the A&P Capital businesses to DEXIS and Digital Bridge. The Digital Bridge deal completed two weeks ago and we continue to work towards completion of the DEXIS deal with one condition precedent outstanding. We are working on an alternative means of completing the deal if this approval is not forthcoming. We've also completed much of the work in 2022 to separate these businesses and prepare them for the transfer to their new owners. These transactions simplify the business and do enable us to focus our energy resources into the future. For our people and customers, it was also important that we launched AMP's new purpose, helping people create their tomorrow, and five values to guide the actions and behaviours of our employees. I'm particularly proud of the purpose and values which reflect a step change in AMP's corporate culture as a customer-focused and purpose-led organisation. AMP is well positioned as we head into a more uncertain environment. We've simplified our portfolio and repositioned it for the future. We'll continue to invest in our key growth areas of bank and platforms, as well as enhancing our digital capabilities and introducing innovative director customer offers. We'll continue to explore and support new growth opportunities. Operational efficiency will also remain a continued focus. P is well positioned as we head into a more uncertain environment. We've simplified our portfolio and repositioned it for the future. We'll continue to invest in our key growth areas of bank and platforms as well as enhancing our digital capabilities and introducing innovative direct-to-customer offers. We'll continue to explore and support new growth opportunities. Operational efficiency will also remain a continued focus and I know Peter will help in this endeavour. As you've heard me say many times, delivering capital returns to shareholders will also remain a priority in 23. We have a strong executive team in place and we've built a culture of performance and capability. As mentioned last year, we did launch our new purpose, Helping People Create Their Tomorrow. This is an important reminder of how this comes to life for our customers, our people and the communities in which we operate. At the core of AMP is a long history of delivering for and contributing to the community and this remains critical to the business today. When we think about our strategy and how we'll grow AMP, we approach this from a position of creating value for all stakeholders. We understand the importance of our role as custodians of the wealth and retirement savings of Australians and the role we can play in improving the financial health and wellbeing of customers as well as those in the broader community through our independently funded AMP Foundation. These pursuits are all the more important and this remains critical to the business today. When we think about our strategy and how we'll grow AMP, we approach this from a position of creating value for all stakeholders, We understand the importance of our role as custodians of the wealth and retirement savings of Australians and the role we can play in improving the financial health and wellbeing of customers as well as those in the broader community through our independently funded AMP Foundation. These pursuits are all the more important in these challenging economic times and it's important for AMP to never lose sight of this broader role that it has played over many years. Let me now ask Peter to talk through the financials.

Thanks, Alexis, and good morning, everybody. For those of you who don't know me, I'm Peter Predrickson, Chief Financial Officer of AMP. I joined the company in January of this year, and I'm pleased to be here presenting our FY22 financial results to you today. It's a privilege to be part of this iconic business at this time. as we progress our transformation and reset the business to deliver on our strategic growth plans, meet the needs of our customers, and create value for our shareholders. I'll be taking you through our full year results today with a particular focus on two key areas. The earnings for each of our businesses, transformation and reset the business to deliver on our strategic growth plans, meet the needs of our customers, and create value for our shareholders. I'll be taking you through our full year results today with a particular focus on two key areas. The earnings for each of our businesses and our capital position and capital management initiatives, including our pro forma surplus once the remaining AMP capital sale completes. At the outset, I want to note that as we work through the completion of the AMP capital sales, we've reported the results for that business as either continuing or discontinued operations. Continuing operations includes China Life AMP Asset Management, or CLAMP, PCCP, and a number of other sponsor investments that we are retaining post the completion of those sales. Discontinued operations includes the sold or held for sale operations of infrastructure debt, global equities and fixed income, international infrastructure equity, and real estate and domestic infrastructure equity. The move of the multi-asset group known now as AMP Investments into the Australian Wealth Management Group is again reflected in these results, operations of infrastructure debt, global equities and fixed income, international infrastructure equity, and real estate and domestic infrastructure equity. The move of the multi-asset group, known now as AMP Investments, into the Australian Wealth Management Group is again reflected in these results, with all comparatives restated accordingly. As is the norm with our results, additional commentary and details can be found in this investor presentation and the investor report lodged with the ASX earlier today. On slide nine, you'll see our FY22 summary where underlying profit is $184 million for the year. Whilst down relative to FY21 underlying results, this result was largely expected as it reflects the impact of strategic pricing changes in our master trusts and platforms businesses, investment market volatility driving AU assets under management lower, and NIM compression in an increasingly competitive residential mortgage market. Losses in advice reduced materially over the full year, reflecting the significant progress we've made on the road to transforming the business into a sustainable standalone business. Our bottom line result was favourably impacted by a $390 million gain on the sale of the infrastructure debt platform, partly offset by separation costs relating to the sale of our IMP capital businesses and the $68 million of impairments announced last month. All up, the bottom line statutory net profit for the full year of $387 million is a pleasing outcome. The waterfall on slide 10 steps through a number of key post-tax profit drivers for the year. Some key metrics that I would especially call out. A combination of an increasingly competitive market and the full year impact of product switching from variable to fixed rate mortgages contributed to a 24 basis point compression in net interest margins for the bank. An $88 million reduction in earnings in our Australian wealth management businesses of master trust and platforms contributed was largely due to strategic pricing changes implemented in the second half of 2021 and reduced AUM as a result of the ongoing underperformance of global investment markets in an environment where overall fund flows into the AWM business were substantially neutral for the year. And a very disciplined focus on cost management with the work we've undertaken to reshape our business resulted in a $38 million post-tax improvement in controllable costs compared to the same time last year, bringing controllable costs to our FY22 target level of around $790 million for the year. On slide 11, we outlined the items below our underlying impact result. These comprise of one-off non-recurring revenues and costs. Key movements here include $25 million for client remediation and related costs, primarily relating to the APRA enforceable undertaking. We committed probable costs to our FY22 target level of around $790 million for the year. On slide 11, we outlined the items below our underlying NPAT result. These comprise of one-off non-recurring revenues and costs. Key movements here include $25 million for client remediation and related costs, primarily relating to the APRA enforceable undertaking we committed to in November 2021. $61 million in transformation costs, largely relating to realising cost improvements across the business. $90 million in separation costs relating to AMP Capital as we progressed the announced trade sales. including some costs we had incurred early in 2022 through the early analysis of the demerger of the business, and $68 million of impairments around property and systems that we signalled to the market in our release on 25 January. All of these were offset by a net gain of around $400 million for the year, largely owing to the $390 million gain on sale of the infrastructure debt platform. Moving now to our business unit performances, starting with the AMP Bank on slide 12. Full year NPAT of $103 million reflects a reduction in revenues for the market in our release on the 25th of January. All of these were offset by a net gain of around $400 million for the year, largely owing to the $390 million gain on sale of the infrastructure debt platform. Moving now to our business unit performances, starting with AMP Bank on slide 12. Full-year NPAT of $103 million reflects a reduction in revenues, primarily as a result of NIM compression experienced in the first half of the year. That $103 million should be measured against FY21 NPAT that's adjusted to around $135 million. after taking into account the $26 million release of credit loss provisions related to the impact of COVID-19 that was reflected in the previous FY21 result. All up a solid result when also taking into consideration the growth in the loan book and the costs associated with customer deposits to support that growth. Slide 13. gives us a waterfall of the NIM compression through the year. Pleasingly, and as we guided to at our first half results in August, AMP Bank's second half 22 NIM of 1.44% was 12 basis points higher than the first half 22, driven by an active focus on margin management. This increase arose primarily from interest rate rises experienced through the half, offset with careful management of our funding base relative to the growth of the loan book. Intense competition and a higher proportion of fixed loans in the first half continued to place downward pressure on revenue margins in the year, with the full year NIM at 1.38%, 24 basis points lower than FY21. If we just go back to slide 12, what you'll see here is that our continued focus on enhancing service and price propositions within the bank saw 9.4% growth in our residential mortgage book to $23.8 billion. This growth included the acquisition of Nano's loan portfolio in late December, with around $400 million of loans transferred in by the year end. Total growth represented approximately 1.8 times system or 1.5 times excluding the nano acquisition for the year. A good result given the competitive landscape within which the bank continues to operate. Total deposits for the year increased by $3.1 billion or 18% on the prior year with household deposits growing 3.6 times system. The majority of these flows were sourced from customer deposits, largely on term deposit. As with the whole of the group, an active approach to cost management and discipline are an ongoing focus for the bank. However, strategic investments in technology as we work to digitise, automate and improve operational efficiency to enhance customer experience and facilitate future growth saw FY22 controllable costs increase 7% to $135 million, driving the bank's cost to income ratio to 47.4% for the year. On slide 14, we've included some additional metrics on the bank and our progress in growing the loan book. The chart on the left-hand side illustrates the point I was making earlier about the strong loan growth we experienced in the second half which resulted in growth of 1.5 times system over the year, excluding the nano acquisition. This growth has been supported by a strengthened digital capability, which coupled with enhancements in our service proposition, has delivered a 33% improvement on median customer cycle time to unconditional approval, now at 8.3 days. What is most important is that as we pursue growth, we are maintaining the high quality of our loan book. At December 31, 67% of mortgages are on owner-occupied properties, with interest-only lending as a percentage of the total book remaining steady at 15%. The average loan-to-value ratio in the book sits at 66%, and the dynamic LVR for existing mortgage business increased 5% to 63%. reflecting recent movements in most property values. It's inevitable that rising interest rates will cause stress for some customers. However, we have systems in place to work with those customers to find appropriate solutions. We also have strong buffers in place, and we continue to closely monitor arrears rates, which are performing well in comparison to peers, with the 90-day The 90 plus day arrears rate improving 0.2 percentage points to 0.3% and the 30 plus day arrears rate increasing only slightly to 0.8%. One thing we should mention is that the number of our customers have used the low rate environment in recent years to pay ahead of their schedule. As at the 31st of December, around 41% of AMP bank mortgages are ahead by in excess of three months, and we retain strong levels of either offset and or redraw balance accounts within the book. Looking forward, we will continue to prioritise writing mortgages profitably. We expect FY23 residential loan growth to be in line with FY22, again acknowledging the competitive lending market, and we expect NIM to be substantially in line with FY22 rates. As I mentioned earlier, we continue to disclose the key performance measures for each of the wealth management business units in Australia, starting with our platforms business on slide 15. Underlying profit of $66 million for the year reflects the impact of competitive pricing initiatives and strategic investment undertaken in FY21 to position the business for future growth. Lower investment returns across global markets impacted average AUM, assets under management, which was down 1.4% to $66.3 billion, in turn contributing to lower revenue. Furthermore, higher than previously experienced volatility in investment markets saw us book losses against North Guarantee Hedges, where last year we had booked profits on those instruments. As noted on slide 16, platforms recorded net cash flows of $936 million in 2022, up from 83 million of net cash inflows in 2021. North net cash flows of $5.7 billion were up $2.4 billion compared to FY21, driven by the closure of our Summit and Generations products in the fourth quarter and the migration of existing members to the North platform. Inflows to North from independent financial advisors in the year of $1.7 billion We're up 31% on FY21 and reflect our ongoing efforts and success in continuing to grow this key strategic platform. On slide 17, we show the results for Master Trust, which delivered subdued earnings in the year off the back of weaker investment markets, the strategic repricing we spoke of earlier, and the loss of one reasonably large corporate superannuation mandate. Underlying profit of $55 million in the year was largely due to the impact of pricing changes implemented in October 2021 as part of simplification activities. In turn, the lower cost base resulting from an ongoing focus on operational efficiency helped deliver a solid master trust profit. Net cash outflows of $3.9 billion improved from outflows of $5.2 billion for the same period last year, with $400 million in pension payments and $940 million of mandate losses contributing to those outflows. Whilst underlying cash flow trends continue to improve, a further significant mandate loss is expected in FY23, with the previously announced conclusion of a large corporate super mandate expected to contribute approximately $4 billion in cash outflows by year end. The exit of that mandate is not expected to have a material impact on profitability. Master Trust assets under management at year-end of $54 billion was 14% lower than FY21, driven primarily by weaker investment market returns and to a lesser extent the impact of those net cash outflows. Further future simplification will focus on investment structures and menus, and whilst this will reduce assets under management-based revenues somewhat, We expect investment management expenses to also reduce to offset any revenue impact. This continues our journey towards building a best-of-breed super business to enhance financial outcomes materially and sustainably for our members. Turning to advice on slide 18. where pleasingly our work on transforming that business to a sustainable standalone business continues to progress well and has resulted in an acceptable full year result within revenue impact. This continues our journey towards building a best of breed super business to enhance financial outcomes materially and sustainably for our members. Turning to advice on slide 18, where pleasingly our work on transforming that business to a sustainable, stand-alone business continues to progress well, and has resulted in an acceptable four-year result, with impact losses improving in line with guidance to $68 million, more than halving the losses from the previous year. The FY21 result included $18 million of impairments that were not repeated in FY22, but FY22 did see revenue of $56 million, supported by higher licence impact losses improving in line with guidance to $68 million, more than halving the losses from the previous year. The FY21 result included $18 million of impairments that were not repeated in FY22, but FY22 did see revenue of $56 million, supported by higher licence fees following the introduction of new commercial terms. Of greater note was the reduction of some $47 million in controllable costs within the business. The continued focus on costs was reflected in a 25.4% reduction in controllable costs in the year to $138 million due to cost-out activity and the completion of a number of advice reshape projects. Moving now to the results for our New Zealand wealth management business on slide 19. The New Zealand business has a compelling position in the overall superannuation savings segment there and operates a successful distribution platform across general insurance and financial advice, creating a diversified revenue base. The business delivered a resilient result for the year, again, despite challenging investment markets. Profit was down 18% to $32 million, primarily due to lower average assets under management from weaker global investment markets. FY22 controllable costs of $35 million were down $1 million on the prior corresponding period, reflecting ongoing efforts to offset inflationary pressure observed across the economy, with the simplification of the operating model delivering a lower cost base following the conclusion of New Zealand Wealth Management's term as a KiwiSaver default provider. Slide 20 provides some background on the AMP capital results for the year. Overall financial results were down 18.6% to $92 million for the year. Earnings from our continuing operations were up 10.8% to 41 million on the back of higher contributions from our joint venture investments in CLAMP and PCCP. Discontinued operations earnings were down 33% to $51 million due primarily to a one-off carried interest recognised in 2021 that was not repeated in the current, down 18.6% to $92 million for the year. Earnings from our continuing operations were up 10.8% to $41 million on the back of higher contributions from our joint venture investments in CLAMP and PCCP. Discontinued operations earnings were down 33% to $51 million, due primarily to a one-off carried interest recognised in 2021 that was not repeated in the current year, real estate mandate losses and fee compression in an increasingly competitive market. These factors were somewhat offset by higher revenue relating to real estate sponsor investments and lower costs as a result of business changes post the FY22 divestments. Turning to this year, real estate mandate losses and fee compression in an increasingly competitive market. These factors were somewhat offset by higher revenue relating to real estate sponsor investments and lower costs as a result of business changes post the FY22 divestments. Turning to slide 21 and a breakdown of the main items within group office. FY22 costs were broadly in line with the prior period, with inflation impacts offset by cost-out efficiencies achieved within the business. Delivering on our commitments to lower corporate debt volumes in the second half, a reduction of $350 million in debt resulted in a 6% decrease in interest expense, with the lower volume offsetting a somewhat higher cost of debt as rising and higher interest rates took hold throughout the year. CLPC earnings continue to positively contribute to group office investment income of $73 million, contributing a not insignificant offset to the loss of returns from our equity investment in Resolution Light Australasia after our sale of that asset in the first half of 2021. Moving to slide 22 in our China Life Joint Ventures report, We're seeing higher earnings from our investments as the Chinese pension market continues to experience strong growth, particularly in CLPC's core business lines. Increasing earnings from CLPC in 2022 resulted in a doubling of the dividend received from that investment to almost $15 million. Chinese investment markets, as with all global investment markets, experienced some challenges in 2022, but we are of the view that some further improvement might be anticipated in 2023 as markets stabilise and reopen post-COVID-19. Moving now to controllable costs on slide 23. where in an increasingly competitive sector, we delivered on a key strategic priority for the year, reducing FY22 costs by $54 million to $791 million through disciplined cost management and in line with guidance. The key outcome across the year which saw our base level of costs rise year on year by sedative sector, we delivered on a key strategic priority for the year, reducing FY22 costs by $54 million to $791 million through disciplined cost management and in line with guidance. The key outcome across the year was which saw our base level of costs rise year on year by $70 million as we transferred AMP investments and its costs from AMP capital into AWM, was that a $22 million CPI increase over our cost base and continued investment in businesses to support growth was more than offset by a total of $76 million of reductions achieved through our cost out program. As a result, on a year-on-year comparative basis, costs are down a net $54 million due to those major cost-out programs that are ongoing into FY2023. Notwithstanding the increasingly competitive sectors in which we operate, we expect to report FY23 controllable costs flat on FY22 by cushioning the impact of further inflationary pressures through ongoing tightening of costs across the business. On slide 24, we show the group capital position as at 31 December 22. As we did in August, we've provided a breakdown of our capital position, clearly showing the minimum regulatory requirements and the appropriate and prudent buffers mandated by the board to ensure the business is set to withstand ongoing market volatility. Our approach reflects the fact that we're operating in an uncertain market environment, in two well-regulated sectors of both banking and wealth. That said, we have a strong business, which gives us the confidence to continue with our previously announced $1.1 billion capital management program, including within that the resumption of payment of dividends off the back of this year's solid result. Slide 25, we step through the movements in our surplus capital position through the year, Our assessment of the 900 odd million in surplus capital is driven by the solid profit outcome for the year, the sale during FY22 of our stake in Resolution Life, and the capital management activities already undertaken in FY22. Through the movements in our surplus capital position through the year, our assessment of the 900 odd million in surplus capital is driven by the solid profit outcome for the year, the sale during FY22 of our stake in Resolution Life, and the capital management activities already undertaken in FY22. As at 31 December, $267 million of the initial $350 million share buyback announced in August has been completed. That leaves $83 million of that buyback to complete. which will become our next focus after the release of these results and the payment of a final dividend for the year that we announced today. Beyond this total of $425 million returned to shareholders, we will ask shareholders to approve further buyback at our annual meeting in the end of March. As a result of our strength in capital position, we are expecting, based on current metrics, to pay... both an interim and final dividend for FY23 that are each substantially in line with the FY22 final dividend as part of the broader $1.1 billion capital management program. Slide 26 shows a pro forma of our surplus capital position post-completion of all the AMP capital sales. This number is post the $267 million buyback to date, so a further $83 million will be reduced from this pro forma outcome as we complete our full $1.1 billion of capital management activities. The pro forma $400 million excess at this point remains a prudent and appropriate level given the type and volatility of the markets that we operate in. So to slide 27, where we provide an outlook for a couple of the key financial metrics across the business in FY23. At the bank, we will continue to target above-system residential loan growth, with FY23 NIM expected to be generally in line with that achieved over FY22. In platforms, FY23 assets under management-based revenue margins are again expected to be generally in line with FY22. Controllable costs are expected to be flat on FY22 as higher inflationary pressure somewhat offsets system cost-outs that we will look to achieve in FY23. So, in summary, from a financial perspective, we would say that our full-year results show that we're well-placed heading into FY23 despite the challenging and competitive markets that we have been in and that remain ahead of us today. In my very short time here, what I've seen is an organisation committed to a strong purpose, to our customers and to the delivery of our strategy and to value for our shareholders. We have delivered a $54 million reduction in costs in the year, despite rising and ongoing inflationary pressures. Our earnings, although lower when compared to the prior period, reflect the resilience of our business after lower investment markets impacted assets under management. Strategic pricing to deliver sustainable businesses reduced revenue, and markets generally provided a much more competitive and challenging environment. With that, I'll hand back to Alexis to take us through the ongoing process and our strategic priorities and wrap up. Thank you.

Thanks very much, Peter. It is important to be reminded of the priorities we set ourselves for FY22 and to reflect on how we delivered on these. Given the high interest rates and inflationary preference that we're seeing, it's important that we support our customers by offering competitive mortgages and deposit rates. We've maintained strong credit quality throughout this period of rising interest rates and remain conscious of the potential impact on costs of the inflationary pressures we are seeing across the equator. It is important to be reminded of the priorities we set ourselves for FY22 and to reflect on how we delivered on these. Given the high interest rates and inflationary pressures that we're seeing, it's important that we support our customers by offering competitive mortgages and deposit rates. We've maintained strong credit quality throughout this period of rising interest rates and remain conscious of the potential impact on costs of the inflationary pressures we are seeing across the economy. Investment market volatility is impacting average assets under management, but also provides an opportunity to help customers navigate increased uncertainty in financial markets. In a volatile environment, the importance of security around retirement savings becomes even more important. We have a significant opportunity here with our new lifetime retirement solutions. Competition in the superannuation industry remains strong and reinforces the importance of our strategy for the Master Trust business to simplify and lower costs while continuing to focus on investment performance where we've made great progress in 2022. For A&P Bank, competition in the sector is also increasing and we're responding with innovative products such as our digital more important. We have a significant opportunity here with our new lifetime retirement solutions. Competition in the superannuation industry remains strong and reinforces the importance of our strategy for the Master Trust business to simplify and lower costs while continuing to focus on investment performance where we've made great progress in 2022. For AMP Bank, competition in the sector is also increasing and we're responding with innovative products such as our digital mortgage to ensure we remain competitive. Finally, industry and regulatory change are still top of mind. We remain supportive of the proposals under the Quality Advice Review but await the final government response. Regardless, AMP is well positioned to help address the need for accessible financial advice and we continue to engage with the government and industry to find a solution to meet this need. The path to a new AMP has not changed. In November 21, we set out the strategy being to simplify AMP's portfolio, reposition our core businesses and retail banking and wealth management to better compete and begin exploring opportunities for long-term sustainable growth. We've made good progress across each of these areas and have clear priorities for 23. The six strategic priorities that we'll be accountable for in 2023 are clear. will be focused on returning capital to shareholders, driving operational efficiency, growing AMP Bank, Proftel Banking and Wealth Management to better compete and begin exploring opportunities for long-term sustainable growth. We've made good progress across each of these areas and have clear priorities for 23. The six strategic priorities that we'll be accountable for in 2023 are clear. will be focused on returning capital to shareholders, driving operational efficiency, growing AMP Bank profitably, being conscious of the market dynamics, growing IFA flows in our flagship North platform, supporting new growth opportunities and building on our brand and culture. And while we think about these strategic priorities, we also keep in mind our commitment to creating a sustainable and equitable future for all our stakeholders and consider the role we play in addressing sustainability challenges in our communities. So to summarise, we've made strong progress on our strategy and have delivered on our promises for the year. We're close to finalising the A&P capital sales and are repositioning our portfolio to wealth management and banking in Australia and New Zealand. We have announced and commenced capital returns to shareholders, including the announcement of a two and a half cent dividend, which demonstrates our confidence in the business. We've launched first to market retirement solutions for the north platform with a lifetime income account, as well as a new digital mortgage that supports our direct to customer channel. We have more work to go, but I'm pleased with the progress we're making as a purpose-led, customer-focused organisation with a high performance and accountable culture. We have the right team and I'm confident we can continue to deliver. On that note, Peter and I am happy to take questions, so I'll hand to the moderator.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your question, please press star 2. If you are using a speakerphone, please pick up the handset to ask your question. The first question today comes from Simon Fitzgerald from Jefferies. Please go ahead.

Hi there, Alexis. Just the first question I wouldn't mind asking is a little bit more around costs. If we can focus for a bit just on the corporate and office costs.

If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your question, please press star two. If you are using a speakerphone, please pick up the handset to ask your question. The first question today comes from Simon Fitzgerald from Jefferies. Please go ahead.

Hi there, Alexis. Just the first question I wouldn't mind asking is a little bit more around costs. If we can focus for a bit just on the corporate and office costs. I guess I'll go back to 2015. AMP delivered an underlying profit of $1.1 billion. It had corporate costs, I think, in the order of $61 million then. Today we've got a profit number that's 83% lower at 184, yet corporate costs pre-tax are $96 million. I was wondering if you could sort of talk to us about what your view is about how that should look. I mean, I say that in the context that AMP is now a $3.5 billion market cap company.

Yeah, thank you, Simon. Look, I profess I don't know the composition of the costs in 2015, so maybe you can educate me a little further on that. But if I look forward to where we need to be, and I said this from the moment I stepped in the door, clearly we still have the legacy of the past and being a far bigger organisation, a lot of that sits in the corporate space than we need to be given the businesses we have today. You know though that we're still in the position of transferring many of those businesses to where we need to be and I said this from the moment I stepped in the door. Clearly we still have the legacy of the past and being a far bigger organisation and a lot of that sits in the corporate space than we need to be given the businesses we have today. You know though that we're still in the position of transferring many of those businesses out and so we're dealing with the stranded costs and some of that comes into the corporate area, some of that doesn't. So, you know, I think we've still got a long way in terms of reducing our costs into the future. Clearly not where we need to be. I think next year just eating the inflation will be challenging for us but we're absolutely committed to doing that and we'll continue to look to reduce costs and I think that's one thing both Peter and I are completely united on.

That's helpful. Might just talk to the advice business then, whether you still stand by the previous target of a break-even scenario in FY24?

Yeah, we're still ambitious about getting to that zero target by the end of 24. As I said last time we were talking, I think that last 20 to 30 million remains challenging for us, but that is still our ambition.

Okay, that's helpful. And I've got a couple of questions just on the sort of bank, et cetera. The fixed rate mortgages that will roll off in 23, what's your view on, say, the effective... Yeah, we're still ambitious about getting to that zero target by the end of 24.

As I said last time we were talking, I think that last 20 to 30 million remains challenging for us, but that is still our ambition.

OK, that's helpful. Then I've got a couple of questions just on the sort of bank, et cetera. The fixed rate mortgages that will roll off in 23, what's your view on, say, the effective LVR of that group of borrowers? And do you have any sort of comments about what the average increase in their effective interest might be for those borrowers that come off fixed rate mortgages in 23 and what your exposure is there?

Yeah, I mean, you can see in the pack that our fixed rate portfolio, I think, is about 2.8 billion and about 50% of that will roll off through 23 and 50% through 24. Depending on when those people came into the portfolio, you know, their interest rates could rise from 2-ish to 6-ish. That's about the numbers we expect. I don't have the LVRs per specifically in my head for the fixed rate portfolio. But, you know, at this point, most of those customers, and I say most, sit under the buffers that we set. But clearly, it's a more challenging environment. I mean, if you look at our arrears at the moment, the 30-day arrears have started to tick up a little bit, but there's nothing alarming there. And the credit quality of the book still looks quite healthy. But obviously, we need to keep a close eye on that.

Yeah, no, that's fair. And then maybe you could make some comments too about how you see your overall funding mix going forward. I mean, at the moment, there seems to be a bit of a competition for deposits at the moment. So just wondering what your sort of thoughts are there in terms of the competitive landscape for attraction of deposits.

Yeah, I mean if you look at our deposit funding over the last years, we've been in the 80% and we still are in that space. We've become a bit of a digital deposit acquisition machine to be honest. I think we acquired about $3.6 billion last year and continue to do so this year. Your comments around funding are definitely factual. You know the market is more competitive. There has been a lot of cheap funding available to some of our competitors and And that probably isn't the case now, but I think we've really established ourselves as a deposit machine, but clearly it's going to be a more challenging environment.

And just one final question, if I may, Alexis, just in terms of the investments in the associates, with particular reference to PacCoast, I was just wondering what the long-term sort of outlook for that holding of that business might be.

Sorry, I didn't quite hear that which holding. PCCP. Oh, PCCP, sorry. It's just the acronyms there we all use. I think I've been clear about the fact as we sold the AMP Capital businesses, it kind of isn't a natural fit to have a US real estate.

And what the long-term sort of outlook for that holding of that business might be.

Sorry, I didn't quite hear that which holding. PCCP. Oh, PCCP, sorry. It's just the acronyms there we all use. I think I've been clear about the fact as we sold the AMP Capital businesses, it kind of is a natural fit to have a US real estate in our portfolio. We've been talking to the founders of the business, but at this point that business continues to perform against expectations for us.

Okay, thank you for taking my questions. Thank you. The next question comes from Lafatani Sotirio from MST. Please go ahead.

Good morning and thanks for the opportunity to ask some questions. May I start with the private wealth business and I acknowledge your comments in relation to the advice and the ambition to continue cutting costs there, but there's some other dynamics that are playing out in this business and I wouldn't mind getting a bit more information. I know that it happened in the first half to an extent, but You know, if you look at financial year 22, there's a negative $17 million investment experience and there's positive $15 million in bias and the ambition to continue cutting costs there. But there's some other dynamics that are playing out in this business and I wouldn't mind getting a bit more information. I know that it happened in the first half to an extent, but, you know, if you look at financial year 22, there's a negative $17 million investment experience and, It's positive 15 million in 21. You know, there's a 32 million delta there. I think it's, from memory, got something to do with the guaranteed products, but can you just give us a little bit more colour as to what's happening there and what your expectations are to managing this volatility?

Yeah, thanks for the question, Laf, and I will ask Peter to comment on that. I mean, you're quite right in pointing out a lot of that relates to the hedging program for the guaranteed product in North, and over the cycle we'd expect that to come to zero, but obviously in any one year it doesn't become zero. Peter, do you just want to talk about 21 versus 22?

Yeah, look, interestingly enough, there's a $29 million delta on hedging the North Guarantee platform alone year on year. So I think we're showing something like $14 million, $15 million negative in FY22 against a $12 million positive outcome in FY21. So the issue with the sorts of instruments we've got to underpin that product is that there is volatility. That delta on The North Guarantee platform alone year on year. So I think we're showing something like $14 million, $15 million negative in FY22 against a $12 million negative. positive outcome in FY21. So the issue with the sorts of instruments we've got to underpin that product is that there is volatility. That volatility does hit the P&L. There was significantly more negative volatility, if you like, given the very significant and very rapid rise in interest rates through FY22, one would expect there to be less volatility in a more benign interest rate environment or a more balanced interest rate environment. So no one's ever going to give you an expectation of what those numbers look like next year, but one would hope that in a more... in a more balanced environment in the context of changes in rate and very rapid rise in interest rates through FY22, one would expect there to be less volatility in a more benign interest rate environment or a more balanced interest rate environment. So, you know, no one's ever going to give you an expectation of what those numbers look like next year, but one would hope that in a more... in a more balanced environment in the context of changes in rates, whether they're up or down, the volatility would be significantly less.

And over history, they're about zero, so you'd hope that over time that's about where we hit with those.

It's interesting because the impact of that change of that instrument around that product over the last eight years is whether they're up or down, their volatility would be significantly less.

And over history, last year, about zero. So you'd hope that over time, that's about where we hit with those.

It's interesting because the impact of that instrument around that product over the last eight years is a $1.6 million positive. So Lex is right, it goes up and down.

Okay, so just moving on in that same business. Now, in wealth other line, there was a sort of 9 million deterioration from the first half to the second half. And as I understand, that primarily relates to super concepts and the previous MAG business. So can you just talk us through what that deterioration is? Has there been some repricing setting? And And ultimately, there's a serious question here. You're carrying some business, another two businesses, it looks like, within the wealth division that aren't profitable. And so are there some serious questions being asked internally? You know, if you can't get advice this era, why are you still owning it? Why are you still owning the concepts? Is MAG a natural fit if you're still losing all this money? If you could just add some colour to those questions.

Firstly, I think when we talked at the half-year results, Laf, we said not to expect the same cost reductions in advice in the second half as we did in the first half. So I would just comment on that because of the nature of the variability of the costs. And so, I mean, I'm sure there's a few other anomalies in there, but I would say that that's one of the major reasons. You're right to call out the fact that advice is still a loss-making business and we're not trying to hide that. We've been very transparent about our results. At this point we believe the advice business is a very important part of the portfolio. It has been a very important part historically in supporting our wealth management business and continues to do so. We're very committed to bringing that to a to a break-even business. I'm not suggesting that's going to be an easy trajectory, it is not, but we're working very hard along with our head of advice Matt Lawler. So let me comment on that. In terms of super concepts, I mean I think it's been a five or so million drag on the bottom line. for quite a few years now. It is a business we continue to look at and to try and make more efficient, but clearly it continues to make lostness and continues to do so. We're very committed to bringing that to a break-even business. I'm not suggesting that's going to be an easy trajectory. It is not, but we're working very hard along with our head of advice, Matt Lawler. So let me comment on that. In terms of super concepts, I mean, I think it's been a five or so million drag on the bottom line. for quite a few years now. It is a business we continue to look at and to try and make more efficient but clearly it continues to make loss. So I think we're focused on both those businesses. At the moment they both remain an important part of the portfolio but certainly we need to make sure they get towards that break-even base.

Okay, so why don't I move on. Just going on to the sale to DEXIS, can you give us a little bit more detail around what Plan C or the third plan, whatever you want to call it, because we're roughly a week away from the revised deadline. And so if we do move past the revised deadline, are we looking at a potential reset again of the upfront component? And what factors go into determining the change in the up-route component? Because one of the things that happened between your last result and now, we've seen the up-route move from $250 to $225. I mean, what drove that change in price? And what may the new price be if you don't reach the next deadline?

Yeah. Clearly we're working hard on the original plan which obviously is that condition precedent I referred to before by the end of this month but you know we have to work on alternatives because that may or may not be forthcoming. So the team is working really hard now to get to that alternative plan which would allow the management of the assets to move across to Dexus along with the majority of people during that March period. Now you know that we have here two willing parties, two parties genuinely coming to the table to work on this alternative plan. DEXIS clearly wants the assets of AMP included in their portfolio and we clearly want to deliver both the assets and the people to them because it's a much better home for them right now. We are, it's complex, so I'm not suggesting it's not that alternative plan, but we continue to work in goodwill towards that date of 28th of February with a completion a little bit later. At this point, I don't have any comments to make about whether there might be further reductions. We're working on the basis of what we sent to the market in early January.

Okay, so this one follow-up question with the overall cost guidance, there is a little bit of surprise. I mean, you know, this is a follow-up from the earlier question. You are carrying a lot of cost and, you know, keeping it just to the... With the completion a little bit later.

At this point, I don't have any comments to make about whether there might be further reductions. We're working on the basis of what we sent to the market in early January.

Okay, so just one follow-up question with the overall cost guidance. There is a little bit of surprise. I mean, you know, this is a follow-up from the earlier question. You are carrying a lot of cost and, you know, keeping it just to the – keeping it flat, like I understand there's inflation around, may seem like a good outcome. But do you think that there is more opportunity to start moving on that quicker, as in this financial year, rather than pushing it to next financial year?

Let me take that in a few parts. Firstly, there is 8% inflation, right? I'm not suggesting wage increases are in that realm. The industry data would suggest they're not, but it still is going to be quite high this year. So we have to eat that 8%. We also, while we've sold a lot of businesses, we still have the legacy and history of those businesses within our operating model, whether that's from a technology perspective, whether that's from an entity perspective, et cetera, et cetera. So that's why we've guided the market towards flat costs in 23. And that in itself will not be easy to achieve. What I will say, though, is I know that our cost base is too high for the size of the business we have. Peter has walked in the door and he knows that our cost base is too high for the size of the business we have. We will work hard on that, Lath, and we will work hard on it through 23. Three, we'll work out on it through 24. But I just don't want to give unreal expectations to our shareholders given the work we need to do in 23 in terms of simplifying that landscape operating model, et cetera.

Thank you for that. And just one final question. So if we're looking at the return on capital in the bank, the under-earning in the advice business and the respective assets there, Is there some serious questions internally about do you actually put some of these key assets up for sale? I mean, you could get a good price for North, you could get a good price for your bank. Are your shareholders better served by selling some of these key assets?

I mean, as the CEO, that's a question I have to ask myself every single day of the week, right? What is the right strategy here? Because at the end of the day, I have to deliver value to our shareholders. And we'll continue to do that, as will the board. So, I mean, that is a responsibility I take very importantly and we discuss various options constantly, both at our executive table and the... Are your shareholders better served by selling some of these key assets? I mean, as the CEO, that's a question I have to ask myself every single day of the week, right? What is the right strategy here? Because at the end of the day, I have to deliver value to our shareholders. And we'll continue to do that, as will the board. So, I mean, that is a responsibility I take very importantly, and we discuss various options constantly, both at our executive table and the board table.

including asset sales, further asset sales are the big ones.

I mean, you've always got to look at portfolio mix. And I think when I walked in the door, I said, looking at portfolio mix will be something we have to constantly do.

Okay, thank you.

Thank you. The next question comes from Kieran Chigney from Jarden. Please go ahead.

Morning, guys. A couple of questions, maybe just starting on capital, I just wanted to check a couple of numbers Peter called out earlier. The pro forma surplus capital position, previous results I think was two bill, you're saying 1.25 today, so a reduction of 750. There's obviously around questions, maybe just starting on capital, I just wanted to check a couple of numbers Peter called out earlier. The pro forma surplus capital position, previous results, I think, was two bill, you're saying 1.25 today, so a reduction of 750. There's, you know, obviously around 500 impact from the buyback you did during the period in the hybrid. Can you just sort of explain what else sort of led to that additional sort of 250 mil delta reduction?

Well, $267 million has been paid back to shareholders. So that's a start point. You'll see in the waterfall that we're also talking about some of the costs that we still have to incur next year, FY23. I think it's something in the order of $45 million after tax in terms of money we are putting to work as part of the program that we talked about a couple of years ago in respect of cost out of the business. So if you take those two alone, you're getting down to that $1.2 billion.

And the hybrid?

With the hybrid, yeah. I'm taking the buyback, obviously, and the hybrid into account. So they're a bit over 500 mil. The surplus capital is reduced by 750. So I guess the question is, what is that other 250 million?

excluding the buyback and excluding the hybrid yeah we've also taken out some of the non-liquid assets that were included in our capital base there um kieran so you get a better better view of the of the capital okay and i'll maybe follow up on offline on that and then so this excluding the buyback and excluding the hybrid We've also taken out some of the non-liquid assets that were included in our capital base there, Kieran, so you get a better view of the capital.

Okay. And I'll maybe follow up offline on that. And then, so this 1.25 surplus, adjusting for sort of the remaining capital proceeds, capital returns, comes down to a bit over 400 mil Can you just remind us what that 400 is being earmarked for and why you're still holding that? I mean, obviously, I would think the board target number takes into account volatility type buffers. So just what is that 400 mil earmarked for?

Yeah, fair question, Kieran. Obviously, I get asked that question a lot. I think if I look at our surplus capital, the way I think about it is, firstly, in terms of getting the $1.1 billion back to our shareholders, that is going to take us time. As you know, we've already bought back $267 million. We announced a dividend today which will give back about another $75 million. We'll be able to continue the buyback in the coming days. Now we've got the results out so we can move towards that $350 million. We've committed to additional buyback today given we've got the regulatory approval subject to shareholder approval in March. That is going to take us a fair way through 2022 and that is working really, really hard. Then we've committed to the additional 350 which we haven't given you any detail on but we'll continue to work on later in the year. So let's just be clear, that is going to take us into 24 and that is working as hard as we can to get back capital share holders. In terms of the surplus, as I've said before and I'll say again, committed to the additional 350 which we haven't given you any detail on but we'll continue to work on later in the year. So let's just be clear, that is going to take us into 24 and that is working as hard as we can to get back capital shareholders. In terms of the surplus, as I've said before and I'll say again, we need to grow in this organisation. So if I look at any surplus capital, I look at it in a third, a third, a third. About a third would go to bank growth. Of course, we have to make sure we grow that bank profitably and I'm serious about that. We can start growing below cost of capital. That doesn't make sense. So we need to grow the bank. The second third will look at growth opportunities within that retirement specialist area that I talked about before, because we've still got to bring growth into the organisation. And the third, the last third, if we can't find opportunities that actually contribute to shareholder value, we'll look for alternative ways to give back to it. But that's not going to be something I have to worry about until we get into that 24 year, given how hard we're going to have to work to give back the initial commitment.

Okay, thanks. And the second question just flowing on from one of your comments there, Alexis, on growing the bank profitably, you know, the ROE.

Bring growth into the organisation. And the third, the last third, if we can't find opportunities that actually contribute to shareholder value, we'll look for alternative ways to give back to it. But that's not going to be something I have to worry about until we get into that 24 year, given how hard we're going to have to work to give back the initial commitments.

Okay, thanks. And the second question just flowing on from one of your comments there, Alexis, on growing the bank profitably. You know, the ROE did improve to 10% in second half, but obviously it's still a fairly benign credit backdrop. So on a normalised basis, probably still very high single digits. So, you know, what is sort of the target ROE within that part of the business? And so you're happy to grow above system, even if you're shy of that at the moment?

Look, I think we've got to be around those numbers, Kieran, which is why we've got kind of a flat NIM growth for 23 in accordance with the average for this year. I am conscious, you know, that there's likely to be less new business through 23, so there's going to be... So, you know, what is sort of the target ROE within that part of the business?

And so you're happy to grow above system, even if you're shy of that at the moment?

Look, I think we've got to be around those numbers, Kieran, which is why we've got kind of a flat NIM growth for 23 in accordance with the average for this year. I am conscious that there is likely to be less new business through 23, so there's going to be competition in the refinancing area and competition for any new volumes. I think it's great that we've got our digital mortgage out, but I would expect the return in capitals to be similar.

Okay, and just a final question on wealth management. Just on the sort of external investment management expenses there, came down quite sharply sort of through second half of 22, both in dollar terms and terms of basis points. So as we look out through 23 and you're flagging a little bit more margin compression, I guess mainly in the Master Trust, sort of external investment management expenses there, came down quite sharply sort of through second half of 22, both in dollar terms and in terms of basis points. So as we look out through 23 and you're flagging a little bit more margin compression, I guess mainly in the master trust part of the business, is most of the heavy lifting being done on that investment management expense line or is there opportunity for that to come down proportionally so net margins are a bit more insulated?

Yeah, you're exactly right. We do expect those IMEs to come down broadly in line with the margin compression, so it should be reasonably flat overall for the coming years. So there's more work in that line.

Okay, great.

Thank you.

Thank you.

Thank you. The next question comes from Andrei Fednik from Morgan Stanley.

Please go ahead. Good morning. I wanted to ask a question around integrating NANA into the bank. For example, how long does it take to underwrite or prove an A&P mortgage right now, and how quickly can NANA do it, and when would you hope to actually have that implemented?

Firstly, we expect that that book will, because it's a book migration, so we expect that book migration to happen over the coming months, so it's not going to be a long period of time.

Does it take time to write a proven AP mortgage right now, and how quickly can Anna do it, and when would you hope to actually have that implemented?

Firstly, we expect that that book will, because it's a book migration, so we expect that book migration to happen over the coming months. So it's not going to be a long period of time. I think we're talking about two to three months. The Nano book is quite a clean book. Actually, the credit quality was similar to what our credit quality was, so not terribly worried about that. And we've already started writing to customers. it should come across pretty quickly. In terms of the time, I mean, you know we've launched our new digital mortgage, so I would expect that the times being experienced for customers, at least those who are refinancing at the moment, would be pretty similar. If you go through a brokerage today with A&P, it's about at that eight, seven to eight days.

Thank you. And just a question, I'm Costs, because it seems like the costs were higher. We were looking for this result, and the cost outlook into next year also seems higher, I think, given what we've seen. Are there any one-off on costs? For example, in the second half, is there any seasonality? Are there any one-off impacts on costs we should be thinking about?

Yeah, there definitely is seasonal impact on our costs for a variety of reasons. Firstly, because of our year-end, the wage increases, et cetera, come through in March, so you see a higher impact in the second half. So that is an ongoing seasonality adjustment. And secondly, for us, we see a lot of... ..typically see more of the marketing and branding spend come through in the second half.

So traditionally... ..seasonality. Are there any one-off impacts on costs you should be thinking about?

There definitely is seasonal impact on our costs for a variety of reasons. Firstly, because of our year end, the wage increases etc come through in March so you see a higher impact in the second half so that is an ongoing seasonality adjustment and secondly for us we see a lot of, typically see more of the marketing and branding spend come through in the second half. So traditionally we have been a higher second half to first half. We guided towards that at the beginning of the year as well. And we had a couple of one-off adjustments that came back in the first half. So that is a seasonal adjustment that we've typically had. But you're right to call it out.

Thank you.

Thank you, Andre.

Thank you. The next question comes from Nigel Pitaway from Citi. Please go ahead.

Good afternoon, guys. Just first of all, a question, if I may, on the advice business. I mean, I think at the half year, you said the reshape of aligned advice is complete. Yet if you do look at slide 18, it looks like there was a 13% drop in aligned advisors again in the second half. So, I mean, I guess the question is, you know, do you think you've now got sort of stability? If I may, on the advice business, I mean, I think at the half year, you said the reshape of aligned advice is complete. Yet if you do look at slide 18, it looks like there was a 13% drop in aligned advisors again in the second half. So, I mean, I guess the question is, you know, do you think you've now got sort of stability in this business? I mean, I realize there was an industry point at the end of September, but are we likely to see this stabilize now moving forward and how confident are you in that? Yeah.

I think there's a couple of important points to raise here. You'll see that we put some additional information into our advisor numbers to include what we call our jigsaw advisors. And those jigsaw advisors are people that typically were aligned advisors that continued to use our services but may have chosen to self-licence because they want to run their businesses in a slightly different way than we would have liked under an aligned badge. But it is important to show them because they're still using our services and we're still getting revenue from them, but obviously we don't have the risk and compliance issues from a licensee perspective. So that's why we put those numbers in there. If you ask me about the reshape of the aligned portfolio, I think we've reshaped in terms of the services we want to offer, the prices we want to offer those services at, what our view is around technology, et cetera. But I'm not going to sit here and say there is no further loss of advisers There may well be some further advisor reductions. Our focus right now is to make sure that we do that respectfully and if we can get them into our jigsaw services and they still remain part of the A&P prices we want to offer those services at, what our view is around technology, etc., But I'm not going to sit here and say there is no further loss of advisors. There may well be some further advisor reductions. Our focus right now is to make sure that we do that respectfully and if we can get them into our jigsaw services and they still remain part of the AMP family, for us that's a better proposition. So I'm not saying there isn't further advisor reductions. There could well be. I think we are now in a position where we can start to attract people because we've done the hard yards. But as you know, that takes a little time to do that.

Okay, thank you for that. And then just on the sort of $20 million to $30 million of cost reduction that you say will be the most challenging in terms of getting that business back to break even, I mean, is that really dependent on, you know, some sort of, I guess, reward from the advisory view? I mean, are you going to need some help? from, I guess, regulation in order to get that last cost out? Is it right to tie up those factors or...?

Well, firstly, I mean, as I said earlier, completely support the quality of advice review because I think as one of the wealthiest nations in the world, our financial literacy is not great. And so any way we can help Australians be better aware of their financials and particularly their superannuation and pension, all the better. But, I mean, we can't rely on legislation. We have to keep doing the hard yards with or without legislation. And so I'm not banking on that. If that comes... Well, firstly, I mean, as I said earlier, completely support the Quality of Advice Review because I think it's one of the wealthiest nations in the world, our financial literacy... is not great and so any way we can help Australians be better aware of their financials and particularly their superannuation and pension, all the better. But, I mean, we can't rely on legislation. We have to keep doing the hard yards with or without legislation and so I'm not banking on that. If that comes, I think it'll help us. It'll certainly help us to grow the customer base but we have to work hard regardless of that. The reason I say the last 20 to 30 million is hard to get out is, you know, we have had to take a complete reset in a new environment. Clearly, you know, we built up huge amounts of compliance, risk and legal resources in a period where we need to be. I think we have cleared the problems of the past and we need to reset the way we manage that business in terms of risk and compliance. And as has been asked earlier today, we still have a corporate office that is too big for the size of the organisation, and some of that flows through advice as well. And both of those we need to continue to work on. But I'm not relying on the quality of advice review to hit our guidance in relation to advice.

OK, thank you for that. And maybe just finally, I mean, previously you'd, I think, said on the Master Trust business that you had the expectation of that being... cash flow net positive in FY24. I may have missed it, but I didn't see that reiterated today. So is that still the expectation?

That would be an ambition, but I think to get it to net cash flow positive by 24 is ambitious for us. It doesn't mean we won't stop trying, but it certainly is ambitious, given we've still got the large mandate coming out this year and it's an incredibly competitive environment. But we are working on it. I think it will be ambitious, though.

Okay, great. Thanks very much for that. Thank you. Thank you. The last question today comes from Lafatini Sotirio from MST. Please go ahead.

Sorry, just one follow-up question in relation to the excess capital position I think Kieran asked about. There was a comment that you made about no longer including some non-liquid amounts in that excess capital calculation. Can you provide a little bit more colour as to what that is?

We can we can do that at a later time we'll explain the differences left but there's some deferred tax assets there which you can find in our accounts and some of that was is included in capital at the group levels.

So just to be clear so at the last result that was included and in this result it's not included?

Well yeah because we just wanted to be clearer to the shareholders what can absolutely be distributed if we went down that road.

Okay, but is that a yes? So in the last presentation, they were included in the excess capital calculation, the slide, and in this presentation, it's not being included.

Some of them were, but I think we need to clarify that and show the difference between the $2 billion. So we'll get some details out to all of the people on this call today about that difference.

Okay, and just one other question in relation to the hybrid. I think that's been, can you just confirm when that's actually going to, be repaid and when we can start expect to see the cost savings from that adjustment that's come through on the excess.

Yeah, so we're just obviously still working through the regulatory parts of that. I would expect we're going to have some additional announcements on that later in the year but we've got a way to work through there.

Okay, thank you.

Thanks. Thank you very much everybody. Look forward to speaking to you later.